Market Snapshot: Stocks stage rebound as traders shake off rising yields, geopolitics

U.S. stocks traded higher on Wednesday, as investors appeared to have shaken off fresh North Korea worries as well as fears of rising bond yields.

Pyongyang overnight signaled its leader, Kim Jong Un, might pull out of next month’s summit with President Donald Trump if the U.S. insists on denuclearization for the isolated nation.

What are the main benchmarks doing?

The Dow Jones Industrial Average DJIA, +0.31% was up 58 points, or 0.2%, to 24,768.

The S&P 500 index SPX, +0.49% was up 12 points, or 0.4%, to 2,723, with nine of its 11 main sectors trading higher. Materials, consumer staples and consumer discretionary stocks were leading gains.

The Nasdaq Composite COMP, +0.74% advanced 47 points, or 0.7%, to 7,399.

The small-cap benchmark Russell 2000 index RUT, +1.21%  hit an all-time high of 1,617.59, after solid gains in the afternoon. Most recently, the index was trading 16 points, or 1%, higher to 1616.36.

The Russell has outperformed its large-cap peers in 2018, with a gain of 5.3% in the year to date versus a 1.9% rise for the S&P 500.

The equity market has scored significant gains so far this month, but it suffered a sizable drop on Tuesday, as the Dow halted an eight-session winning streak.

What’s driving markets?

The stock market seems to have turned a corner this month, overcoming some concerns about inflation, rising interest rates, trade fights and geopolitical tensions. The Dow is up 2.2% in May so far and roughly flat for the year.

Even so, rising rates appear to be peeling some investors away from stocks. Tuesday’s selloff was blamed in part on the 10-year Treasury note’s yield TMUBMUSD10Y, +0.33% rise to a seven-year high above 3%. The 10-year yield rose 1 basis point on Wednesday to trade at 3.0862%.

What are strategists saying?

“Recent market action reflects a balance between risk and reward for investors. On the positive side, there is still growth momentum and solid earnings. But these are counterbalanced with risks on policy issues, trade talks and geopolitics like North Korea,” said Lisa Erickson, head of the traditional investments group at U.S. Bank Wealth Management.

What economic news is on tap?

Construction on new houses dropped 3.7% in April. The annual rate of new homes being built declined to 1.29 million last month from a revised 1.34 million pace in March that was the strongest since mid-2007.

Industrial production rose 0.7% in April, slightly above Wall expectations of a 0.6% increase.

Check out: MarketWatch’s Economic Calendar

Which stocks are in focus?

Shares in Macy’s Inc. M, +11.23% jumped 8% after the retailer reported upbeat sales and outlook.

Under Armour Inc. UA, +6.45%  shares jumped 6%, adding to a year-to-date surge. The stock is up more than 36% since the start of the year.

Shares of Micron Technology Inc. MU, +4.52% are up 3.5% in premarket trading after RBC analyst Amit Daryanani initiated coverage of the stock with an outperform rating and an $80 price target.

Shares of IQVIA Holdings Inc. IQV, -4.56%  were halted in afternoon trading, and last traded down 4.6%. The Food and Drug Administration raised serious concerns with the company’s data, which tracks the amount of pharmaceuticals sold in the U.S., and in particular data related to controlled substances like prescription fentanyl.

What are other markets doing?

Gold futures GCM8, +0.17% were roughly unchanged after earlier trading higher.

European stocks SXXP, +0.21% ended modestly higher on the day, while Asian markets finished flat to lower.

Oil futures CLM8, -0.14% lost ground, dropping 0.2%, and the ICE U.S. Dollar Index DXY, +0.01% gained 0.1%.

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